A new survey by the German market research institute GfK found that consumer confidence is waning in Europe’s largest economy, as economic expectations have “collapsed” following international crises.

“The escalation of the situation in Iraq, Israel and Eastern
Ukraine as well as the gradually accelerating spiral of sanctions
in Russia have now also had a negative impact on the previously
extremely optimistic economic outlook of Germans," said the
German Society for Consumer Research (GfK) in its monthly
report.

The latest survey of consumer confidence is seen falling to 8.6
in September from 8.9 in August, the first reduction in the
consumer climate indicator in the last 20 months.

"Uncertainty with regard to the continued economic
developments in Germany has increased quite considerably,"
the study says.

German consumers are more and more taking global geopolitical
factors into account when thinking about domestic economics,
especially as no long-term solutions have surfaced in Iraq, Gaza,
the Ukraine crisis, or the war of sanctions with Russia.

The confidence dive is the biggest monthly drop since the survey
began in 1980.

The data is the latest blow to Germany’s economy, which
contracted 0.6 percent in annualized terms in the second quarter.
Growth is expected to return in the next quarter. Germany
continues to struggle with net exports, as the crisis plaguing
Europe is dissuading buyers, and threatening economic
development.

Confidence among consumers isn’t the only worry - businesses
aren’t any more confident. On Monday, Germany’s Ifo Business
Climate Index showed its lowest level in 13 months.

The political situation in Ukraine and Russia has certainly
affected Germany, as 6,200 German companies do business with
Russia.

In 2013, Germany exported €36 billion worth of goods to Russia,
and in 2014 it could decrease by up to 25 percent due to
sanctions.